Stocks Erase Gains on Fed’s No-Change Decision

September 21, 2015 — Last week, stocks had advanced in anticipation of Thursday’s Federal Reserve decision on interest rates, initially spiked higher on the “no change” decision, but 30 minutes later, and through Friday, equity gains evaporated. Before closing out the week with a fractional loss, the S&P 500 had gained 2.7% in the run-up to the decision and had surpassed 2,000 for the first time since August 21st. Fed Chair Janet Yellen said policymakers refrained from raising interest rates because of concerns about slowing and stability in China and other emerging markets. The 9-to-1 FOMC member vote essentially forces investors to live with rate uncertainty until at least October or December when Fed members again debate the merits.

In economic data ahead of the central bank policy meeting, Wall Street took comfort in a second straight monthly gain in retail sales, up 0.2% in August, while July sales were upwardly revised to 0.7% from 0.6%. The Federal Reserve reported that industrial production declined 0.4% last month, also following an upwardly revised July increase (0.9% vs. 0.6% previously reported). On Wednesday, the Labor Department said the consumer price index (CPI) fell 0.1% in August, the first contraction since January. The so-called core-CPI (excludes food and fuel prices), rose 0.1% for a second month. On a year-over-year basis, the headline CPI is up 0.2%, while the core-CPI is up 1.8% since August 2014.

For the week, the S&P 500 fell 0.13%, the Dow Industrials slipped 0.30%, and the NASDAQ Composite gained 0.12%. Five of the ten major sector groups posted gains last week, led by Utilities (+2.53%), Consumer Staples (+0.82%) and Healthcare (+0.76%). Materials (-1.59%) and Telecom (-1.46%) fell among decliners. Treasures prices advanced on safer-haven buying, pulling the yield on 10-year Treasury notes down 5.5 basis points to end at 2.134%.

Stocks End Whirlwind Week Positive

August 31, 2015 — After the S&P 500 sank 5.7% the week prior, this past week’s tumultuous trading experience ended favorably higher. Triggered by an 8.5% overnight plunge on China’s Shanghai Composite, U.S. stocks plunged on Monday, with the Dow Industrials initially falling a dizzying 1,089 points, the largest intra-day drop on record, before rebounding to end the week in the positive. In fact, through Monday, the Dow suffered its worst three-day loss on record, plunging 1,477 points. Mostly positive economic data however, helped drive a rebound as Tuesday’s strong new home sales, up 5.4% in July, tempered the selling frenzy. Despite still intense volatility, investor sentiment improved as July durable goods orders rose 2% last month, topping forecasts. Thursday’s impressive upward revision in 2Q GDP growth (3.7% versus 2.3%) also drew Wall Street cheers.

Volatility again surged in the U.S. and abroad. The CBOE VIX volatility index surged 45% on Monday (rising from 28.03 to 40.74), before actually declining two points week-over-week. Benchmark 10-year Treasury note yields had traded to a low of 2% on Monday before rebounding to register an 18 basis point gain on the week, ending Friday at 2.182%. WTI oil prices tumbled as low as $38.24 per barrel before gaining 11.8% for the week.

For the week, the Dow Industrials rose 1.17%; the S&P 500 gained 0.95%; and the NASDAQ Composite rallied 2.62%. Sector performance was mixed with six of the ten S&P 500 sectors posting gains. Energy (+3.66%), Technology (+3.11%) and Consumer Discretionary (+1.72%) gained the most, while Utilities (-4.21%) and Financials (-0.49%) lagged the most.

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